Roussel Laboratoria BV and others v État néerlandais (181/82)

Article 30 of the EEC Treaty

The plaintiffs in the main action observe that the facts relied upon by the Netherlands State in order to justify the contested decree have not been established on the basis of objective reasons in accordance with a proper procedure in the course of which the trade interests concerned would have been given an opportunity to make known their views. The facts relied upon by the Netherlands are fundamentally incorrect.In seeking to prevent by means of the contested decree, on a national basis, the artificial partitioning of the Community market in medicines, the Netherlands State is acting primarily in the interests of the Community with a view to countering unilaterally and on a national basis alleged defects of the Community market in medicines. In a Community market in which directives have achieved a degree of harmonization of national laws, the Member States are not empowered to redress, by means of national measures, situations which they regard as contrary to the Community principle of the free movement of goods. The power to determine whether a situation is contrary to the Community interest and to adopt remedial measures is vested exclusively in the Community.In any event, a Member State may not by its own actions bring about a situation in which a remedial measure itself comes into conflict with Article 30 of the EEC treaty or with another rule of Community law. The Prices of Registered Medicines Decree is contrary to Article 30 because it is capable of influencing trade between Member States and of affecting trade within the Community and because it does not apply to domestic products and to imported medicines without distinction.Even on the assumption that the Member States may adopt pricing measures which restrict trade, the national authorities are in any event obliged to fix the maximum price of the imported product at a level which does not make the sale of the product impossible or more difficult than the sale of the domestic product (see judgments of the Court of 26 February 1976 in Case 65/75 Tasca [1976] ECR 291 and of 6 November 1979 in Joined Cases 16 to 20/79 Danis [1979] ECR 3327). The maximum price which the importer may charge under the contested decree in the event of the resale of medicines imported from so-called cheap countries does not satisfy that criterion. Although the importation and sale in the Netherlands of proprietary medicinal products from Belgium, France or Italy are not rendered impossible, these operations are rendered at least far more difficult than the marketing of corresponding domestic products which are governed only by the Netherlands pricing system embodied in the Prijzenbeschikking Goederen en Diensten.The contested decree creates an obstacle to a change in patterns of trade since a change in the country of origin after the reference date of 15 May 1982 does not entail any alteration of the maximum price, regardless of the reason for the change in the country of origin.Accordingly, the relocation of centres of production of medicines in other Member States would serve no purpose in the case of medicines intended for the Netherlands market. For that reason, the contested decree is in contradiction with the very existence of a common market. Moreover, any increase in the Netherlands resale price for medicines imported into the Netherlands from countries with relatively high price levels is ruled out in advance by Article 2 (3) of the Prices of Registered Medicines Decree.Variations in the prices of medicines within the Community are attributable not exclusively or primarily to subjective and arbitrary criteria applied by the suppliers concerned but to objective factors beyond their control. In any event, even if the price variations involved were regarded as arbitrary, that would be because certain Member States often adopt measures the effect of which is to fix and to maintain artificially prices of medicines in their States at a level different from what it would be if the mechanism of price formation were allowed to function normally. Artificial intervention of that kind naturally has an impact on the prices of medicines in other Member States. The distortion is “exported” from one Member State to all the others. In a common market, the Member States should refrain from any unilateral inteference with the mechanism of price formation where such interference would probably generate additional distortions within the Community.Nor can a national measure such as that at issue in the present case fall outside the prohibition contained in Article 30 by virtue of what is known as the “rule of reason” (judgment of the Court of 20 February 1979 in Case 120/78 Rewe [1979] ECR 649) since in this instance there is a Community system for the marketing of medicines which was introduced by certain directives, the contested decree does not apply to imported and to domestic products without distinction and it does not seek to attain an objective which is in the general interest and prevails over the free movement of goods.Although the court making the reference did not submit any questions concerning Article 36 of the Treaty, it would be desirable, in order to avoid the need to submit a fresh reference for a preliminary ruling, to state that the contested decree cannot be justified on the basis of that article either since the decree has obviously not been adopted for the protection of health but constitutes an economic measure taken by the public authorities.The Netherlands Government contends that, according to the case-law of the Court (see judgment of 9 December 1981 in Case 193/80 Commission v Italy [1981] ECR 3019), in the absence of relevant Community legislation the Member States are in principle free to adopt rules governing production and distribution on their territory. Similarly, the Member States in principle retain their power to adopt measures on prices. That approach is in conformity with the provisions of Article 103 of the EEC Treaty which proceeds on the assumption that the powers relating to conjunctural policy are vested primarily in the Member States.As is apparent from the judgment making the reference, the Prices of Registered Medicines Decree is one of the measures involved in the fight against inflation under the general conjunctural policy pursued by the Netherlands Government. There is no Community legislation governing the prices of medicines. Coordination between the Commission and the Member States with a view to achieving greater transparency in the formation of prices on the market in medicines has not so far yielded any results.As regards the possibility of restrictive effects on the level of prices fixed for the sale of imported products, it should be observed that the contested decree does not constitute an isolated measure but forms part of a general pricing system for medicines which includes provisions on the prices applicable to domestic products set out in the general Prijzenbeschikking Goederen en Diensten. There are sufficient reasons for subjecting imported medicines to distinct provisions, adopted to take account of the specific features of those medicines. Accordingly, the mere fact that the contested decree is concerned solely with imported medicines does not mean that it constitutes a measure having an effect equivalent to a quantitative restriction on imports.The contested decree does not make it impossible to sell imported products. The manufacturer's basic price, charged on the foreign market, is also taken into account for the Netherlands market.In order to examine the question whether the contested decree leads to less favourable treatment for imported products, it is possible to distinguish between, on the one hand, costs which the importer may include in his selling price and, on the other, the profit margin which he may incorporate in his selling price and the profit margins which may be applied at the next stage of distribution.As regards the wholesaler's and the importer's margin, the Prices of Registered Medicines Decree refers to the margin applicable by virtue of the general Prijzenbeschikking Goederen en Diensten. Therefore, provided that the price of imported medicines is not affected by the contested decree, the profit margin remains the same as it was before, with the result that there is no difference in treatment between imported products and domestic products. If the price of the imported medicine falls as a result of the contested decree, the wholesaler and the importer can none the less retain their profit margin in absolute terms, with the result that imports are not affected by a fall in the purchase price imposed by the contested decree. Thus, as far as wholesalers' and importers' margins are concerned, imported medicines are by no means treated less favourably.The purchase price of an imported medicine may be passed on in so far as it does not exceed the basic price charged by the foreign manufacturer. The other costs may be passed on in their entirety. The imponer may also pass on in their entirety price increases occurring in the country of origin. The contested decree is therefore in conformity with the case-law of the Court (judgments of 26 February 1976 in Case 65/75 Tasca [1976] ECR 291 and in Joined Cases 88 to 90/75 Sadam [1976] ECR 323).The contested decree proceeds on the assumption that if the common market operates properly, a supplier cannot charge different prices to purchasers established in different Member States where such divergences are not caused by variations in costs. Price variations attributable to the desire to exploit each national market to the limit of “what it can bear” create or reinforce a partitioning of national markets and accordingly constitute an obstacle to freedom of movement. The contested decree allows the importer to obtain supplies on the market of the country of origin at prices charged to wholesalers and to pass on those prices. A refusal to supply the medicines at that price cannot be regarded as a consequence of the Prices of Registered Medicines Decree but is the result of a decision freely taken by the supplier. Accordingly, a fall in trade resulting from such a refusal is not an effect which is contrary to Article 30. Any other view would lead to the conclusion that a Member State is obliged to accept any level, however arbitrary, of prices charged for imported products. Its effect would be to prevent the Member States from taking action any longer, in conformity with the objectives and the provisions of Article 85 et seq. of the EEC Treaty, against prices fixed by traders in breach of those provisions. Preference should be given to a more restricted, but natural, pattern of trade, as opposed to a more extensive pattern resulting from price discrimination practised by suppliers, which is itself made possible by the defective functioning of the market.An undertaking should not use a de facto partitioning of the market in order to gain in the importing Member State an advantage which could not be obtained in the exporting Member State for a product marketed in the latter State by an undertaking to which the first undertaking is bound by a legal or economic relationship. An undertaking is at liberty to decide with full knowledge of the facts whether or not to market its product in the exporting Member State. If it decides to market the product there, it must, in conformity with the proper functioning of the common market, fix its price without drawing any distinctions on the basis of what may happen to be the geographical destination of the product within that market. For a comparable case, reference may be made to the judgment of the Court of 14 July 1981 in Case 187/80 Merck [1981] ECR 2063, paragraph 11 of the decision.The effect of the contested decree corresponds in substance to that of parallel imports. Once a product has been marketed in a Member State either by the manufacturer himself or with his consent, it must also be allowed to move freely within the common market: The effect of the contested decree is to enable a medicine marketed at a given price in any Member State to be sold on the Netherlands market at the same price without its encountering further obstacles.The Netherlands Government therefore concludes that imported products are not treated less favourably than domestic products and that the measures in question are not contrary to Article 30.The Commission observes that, according to the case-law of the Court (see the aforementioned judgments in the Tasca, Sadam and Danis cases as well as the judgments of 16 November 1977 in Case 13/77 GB-Inno-BMw ATAB [1977] ECR 2115 and of 24 January 1978 in Case 82/77 Van Tiggele [1978] ECR 25), national measures on prices must not in themselves be regarded as measures having an effect equivalent to quantitative restrictions. It may be otherwise if prices are fixed at a level which makes the sale of imported products impossible or considerably more difficult than the sale of domestic products. However, it must be pointed out that unlike the cases so far decided by the Court, this case involves legislation on prices which is not applicable to imported products and to domestic products without distinction, even though the domestic products are also covered by a system of rules on prices. In Directive 70/50/EEC (Official Journal, English Special Edition 1970 (I), p. 17), the Commission adopted a critical attitude with regard to measures on prices applicable exclusively to imported products.In this case, the difficulty consists in ascertaining whether the linking of the maximum price of an imported product to the normal level of prices prevailing in the country of origin, by preventing undertakings from charging different prices on the basis of the country of destination, constitutes a hindrance to trade. As a rule, that question should be answered in the negative since the importation of goods is not rendered impossible or more difficult if it is borne in mind that the level of prices in the country of origin is such as to ensure an adequate economic yield for undertakings. If the maximum price in the importing country is fixed at a level which guarantees the producer the same economic yield as that which he obtains from sales in the country of origin and if additional costs incurred between the stage of production in the country of origin and that of sale in the importing country as well as a reasonable profit margin for the importer can all be included in the maximum price, imports are rendered neither more difficult nor impossible.However, the mechanisms of price regulation established by legislation may be such as to preclude, to a greater or lesser extent, the passing on of costs to the next supplier, with the result that the price charged to the wholesaler does not accord with that which is regarded, in economic terms, as the cost price of the product. In such a case, the effect of linking the maximum price in the importing country to the price charged in the country of origin is to compel the undertaking to sell its products also in the importing country at a price which does not properly reflect the actual cost price, which would be absurd in terms of profitability. In those circumstances, the effect of the legislation on prices may be to hinder imports.Since it took the view that the level of prices in certain Member States, such as France, Italy and Belgium, was too low and was not in conformity with Community law as a result of the strict policy pursued with a view to controlling the prices of pharmaceutical products, the Commission approached the governments of those Member States in connection with their legislation on prices which, in its opinion, had led to an appreciable alteration in the prices charged in Italy and to the liberalization of prices in France. The Commission, however, is not in a position to state that the level of prices of pharmaceutical products in all the Member States is, at present, an accurate reflection of the real cost price of those products.It is for the national court to take account of that state of affairs which characterizes the Community market in pharmaceutical products, by considering whether the legislation in question is compatible with Article 30. Legislation on prices must not have the effect of preventing manufacturers of proprietary medicinal products from selling such products in the Netherlands at a price which accurately reflects at least the real cost price of the product.